The electric vehicle revolution is alive and well in China. After hailing a taxi from Shanghai Pudong airport, my attention instantly drifted to the gallery of EVs on the road, a majority of which I had never seen before. I saw a variety of Li Auto (NASDAQ:LI), Nio (NYSE:NIO), and BYD (OTCMKTS:BYDDY) vehicles, as well as vehicles from companies that don’t trade publicly in the U.S., such as Roewe. However, one vehicle in particular caught my eye: the Wuling G100 van.
The Wuling G100 bears a striking resemblance to Mullen’s Campus EV, and rightfully so. That’s because Mullen first purchases the G100 and then appears to rebadge it to fit the standards of its customers. The Mullen ONE is likely another variation of the G100, as it carries a similar exterior look.
But don’t just take my word for it. A quick look at Mullen’s import records show that the company imported several G100 vans that arrived in July. Additional records show that Mullen imported parts from Nanjing Automobile Import and Export (NAIAC), which arrived in late September. NAIAC’s Yuejin EV Light Truck EC302 is likely the vehicle behind Mullen’s THREE.
For shareholders, this shouldn’t be entirely surprising, as Mullen has imported cars from China several times. In Hindenburg’s short report on Mullen, which was published in April 2022, the short seller uses import records to argue that Mullen imported the vehicles behind its Class 1 and 2 commercial vans from China.
Nothing about importing cars from China and then rebranding them is wrong or illegal. However, this process begs the question: Can these vehicles be fully homologated for U.S. roads, and is this a sustainable business practice?
Is Rebadging Chinese Vehicles a Sustainable Business Practice?
Mullen recently announced that its THREE had received EPA certification and completed the testing requirements for the Federal Motor Vehicle Safety Standards (FMVSS). Satisfying these two requirements will allow the company to begin deliveries to its customers. Still, the THREE appears to be the only Mullen vehicle that has achieved these requirements so far. On top of that, full U.S. homologation requires compliance with other Department of Transportation regulations. Mullen has not yet announced that any of its vehicles have achieved full U.S. homologation.
Even if Mullen acquires homologation for its vehicles, will selling rebadged Chinese vehicles be worth it? Electric Last Mile Solutions (OTCMKTS:ELMSQ) tried deploying this strategy with what is now known as the Mullen ONE, THREE, and Campus before it eventually filed for bankruptcy and its assets were acquired by Mullen.
What Counts as Production?
In October 2021, Mullen announced that its Tunica facility would soon begin assembly of Class 1 and 2 vehicles. Director of Operations Trey Agner referred to the process of forming these vehicles as “production” instead of “assembly” in the same press release.
In recent press releases, Mullen refers to the process of forming vehicles as both production and assembly. In fact, Mullen’s Tunica facility is called the Mullen Commercial Vehicle Assembly Plant, but was referred to as a “manufacturing plant” in the October 2021 announcement. So, is Mullen actually producing these vehicles or just assembling and rebadging them?
Regardless of wording, investors certainly don’t seem to be lending much support toward Mullen’s vision. MULN stock has cratered by 99% this year, despite numerous press releases detailing production milestones. The company has run into Nasdaq compliance issues as well due its shares trading below $1. Mullen tried to remedy this issue by issuing two reverse stock splits totaling a cumulative ratio of 1-for-225. That didn’t work either, as MULN is still well below $1.
The Bottom Line on Mullen
What is “Strikingly Different” about Mullen if the vast majority of its vehicles are already being driven around in China? Granted, the company has the Mullen FIVE in its lineup, which appears to be a proprietary vehicle. However, the release date for the FIVE has been pushed back for several years now and is now forecast for mid-2026. Mullen began collecting preorders for the MX-05, which is what the FIVE was previously known as, in October 2020. At the time, CEO David Michery provided a customer delivery date of May 2022, which was not met.
The bottom line is that Mullen has thus far failed to live up to the hype its vehicles and concept vehicles have generated. This has also been reflected in shareholder interest, which has recently drifted to a yearly low on Google Trends. In order to regain the trust, and interest, of shareholders, Mullen must accomplish something truly strikingly different.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.